ITO 19 (1)(3), MUMBAI V. GANPATRAJ NEMAL JAIN, MUMBAI

ITA 2730/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3494 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-11-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 02-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SMITA VERMA
• Keywords: Bogus purchase
• Section: 48

Judgement Text

SMC IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI , BEFORE SRI SHAMIM YAHYA , ACCOUNTANT MEMBER ./ ITA NO. 2730 / MUM/ 2019 ( / ASSESSMENT YEARS 2010 - 11 ) THE INCOME TAX OFFICER - 19(1)(3) ROOM NO. 220, 2 ND FLOOR, MATRU MANDIR, TARDEO ROAD, MUMBAI - 400 007 / VS. GANPATRAJ NENMAL JAIN, 10/1 BHANDARI STREET, 1 ST KUMBHARWAD, MUMBAI - 04 ( / APPELLANT) ( / RESPONDENT) . / PAN NO. AFNPJ 0762 Q / APPELLANT BY : SHRI SMITA VERMA, DR / RESPONDENT BY : NONE / DATE OF HEARING : 09.11. 2020 / DATE O F PRONOUNCEMENT : 12 .11. 2020 / O R D E R THIS IS AN APPEAL BY THE REVENUE WHEREIN THE REVENUE IS AGGRIEVED THAT THE LEARNED COMMISSIONER OF INCOME TAX [APPEALS (IN SHORT THE CIT(A) ] HAS REDUCED THE ADDITION FOR BOGUS PURCHASES OF PAGE | 2 ITA NO. 2730 /MUM/2019 GANPATRAJ NEMAL JAIN ; AY 10 - 11 11,09,108 / - DONE @ 25% BY ASSESSING OFFICER BY SUSTAINING ONLY 12.5%. 2. NATURE OF BUSINESS OF ASSESSEE IN THIS CASE IS NOT DEALT WITH IN THE ASSESSING OFFICERS ORDER. THE ASSESSMENT WAS REOPENED UPON INFOR MATION FROM SALES TAX DEPARTMENT THAT ASSESSEE HAS MADE PURCHASES FROM BOGUS DEALERS. THE ASSESSING OFFICER MADE 25% ADDITION OF THE BOGUS PURCHASES. UPON ASSESSEES APPEAL LEARNED CIT(A) HAS NOTED THAT THE SALE HAS NOT DOUBTED. ACCORDINGLY, PLACING RELIAN CE UPON SEVERAL CASE LAWS AND UPON THE FACTS OF THE CASE, HE SUSTAINED 12.5% DISALLOWANCE OUT OF THE BOGUS PURCHASES. AGAINST ABOVE ORDER REVENUE IS IN APPEAL BEFORE THE ITAT. 3. I HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE RECORD. I FIND THAT IN THIS CASE THE SALES HAVE NOT BEEN DOUBTED. IT IS SETTLED LAW THAT WHEN SALES ARE NOT DOUBTED, HUNDRED PERCENT DISALLOWANCE FOR BOGUS PURCHASE CANNOT BE DONE. THE RATIONALE BEING NO SALES IS POSSIBLE WITHOUT ACTUAL PURCHASES. THIS PROPOSITION I S SUPPORTED FROM HONBLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF NICKUNJ EXIMP ENTERPRISES (P.) LTD. VS. ACIT [2014] 48 TAXMANN.COM 20 (BOMBAY) IN WRIT PETITION NO. 2860 OF 2012 VIDE ORDER DATED 18.06.2014. IN THIS CASE THE HON'BLE HIGH COURT HAS UPHELD HUNDRED PERCENT ALLOWANCE FOR THE PURCHASES SAID TO BE BOGUS WHEN SALES ARE NOT DOUBTED. HOWEVER, THE FACTS OF THE PRESENT CASE INDICATE THAT ASSESSEE HAS MADE PURCHASES FROM THE GREY MARKET. MAKING PAGE | 3 ITA NO. 2730 /MUM/2019 GANPATRAJ NEMAL JAIN ; AY 10 - 11 PURCHASES THROUGH THE GREY MARKET GIVES THE ASSES SEE SAVINGS ON ACCOUNT OF NON - PAYMENT OF TAX AND OTHERS AT THE EXPENSE OF THE EXCHEQUER. IN SUCH SITUATION IN OUR CONSIDERED OPINION ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE 12.5% DISALLOWANCE OUT OF THE BOGUS PURCHASE DONE BY THE LEARNED CIT(A) MEET S THE END OF THE JUSTICE. ACCORDINGLY, I UPHOLD THE ORDER OF THE LEARNED CIT(A). 4. THE DECISION OF NK PROTEINS LTD. RELIED BY THE REVENUE WAS A DISMISSAL OF SLP BY THE HON'BLE SUPREME COURT AND HAS ALREADY BEEN EXPLAINED AND DISTINGUISHED BY HON'BLE BOMBAY HIGH COURT IN THE CASE OF ADAM H KAZI. THE APPEAL OF REVENUE IS DISMISSED. 5. BEFORE PARTING I MAY ADD THAT IF THE ASSESSEE HAS FILED A CROSS APPEAL OR CROSS OBJECTION AND THE SAME HAS REMAINED UNHEARD, EITHER PARTY MAY APPLY FOR RECALL OF THIS ORDER SO TH AT THE APPEAL CAN BE HEARD TOGETHER. 6. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12. 11.2020 SD/ - ( / SHAMIM YAHYA ) ( / ACCOUNTANT MEMBER) , / MUMBAI, DATED: 12 . 11.2020 , . / SUDIP SARKAR, SR.PS PAGE | 4 ITA NO. 2730 /MUM/2019 GANPATRAJ NEMAL JAIN ; AY 10 - 11 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / (ASSTT. REGISTRAR) , / ITAT, MUMBAI